Financial Technology

Technological innovations have played an enormous role in the shift between generations. Every day, younger people are becoming more skilled in technology that did not even previously exist a few years prior for the older generations. From education to healthcare, technology has affected an array of different industries, offering benefits that were once only dreamed of. Now, research is finding that technology is a big part of how the relationships between financial investors and advisers is being created and retained.

Cisco (News - Alert) recently conducted a study, the second annual Cisco Internet Business Solutions Group (IBSG) Wealth Management study, which highlights wealthy investors’ attitudes on how they engage with their financial advisers. The IBSG Global Financial Services Practice helps financial services executives worldwide transform their businesses by addressing complex challenges they face today and capitalizing on the business opportunities of tomorrow.

The study revealed a $31 billion revenue opportunity with young, tech-savvy investors: wealthy investors aged 55 and younger already represent 40 percent of global investable assets, which is set to increase as they age and inherit assets from older generations during the next 10 years.

The study found that technology, especially social media and video, offer a gateway for courting wealthy investors. The investors under the age of 55 desire increased frequency of interaction and a higher-quality customer experience using collaboration and video technology. The study found the number of technology-savvy investors is growing, there is a strong demand for video and there is a high use of social, mobile and webinars for research.

Technology solutions such as video and collaboration can add value and increase efficiency as wealth management firms interact with investors. These solutions can help financial services firms respond to challenges with compelling new services and business models

"The rapid adoption of technology is quickly changing the game for interactions between wealthy investors and their financial advisers,” said Jörgen Ericsson (News - Alert), vice president and global lead, Financial Services Practice, Cisco Internet Business Solutions Group. “With the right technology-enabled approach, financial advisers can create a significantly improved customer experience resulting in more frequent and higher quality interactions that will boost customer loyalty and that will even attract wealthy investors who currently do not have an adviser."

Seventy-one percent of investors use a PC to check or manage their investments at least once per month, 36 percent do so daily, while 28 percent use smartphones and 24 percent tablets. Forty-nine percent of wealthy investors consider themselves to be "early adopters" of technology or in the "early majority" of those who use new devices and services.

About 50 percent of all wealthy investors have used some type of video to meet with friends, family, or colleagues in the past year. And 61 percent of under-55 investors want the option of having video meetings with advisers (in addition to in-person meetings).

A large portion of investors under 55 have strong interest in services that incorporate visual, virtual, social, mobile, blog and webinar activities and 57 percent, 54 percent and 51 percent of investors in U.S., Germany and the U.K., respectively, are willing to move assets to firms that provide technology-based services.

The study also found there is a lack of trust and low investor confidence in advice. Only 29 percent of the under-55 group in the U.S. and 26 percent in the U.K. trust the investment advice they receive from financial advisers more than that of their fellow investors.

"The client perceptions and preferences identified in the Cisco IBSG study are factors that we already see influencing the development of innovative business models in financial services. It isn't just the young that are developing an attachment to, and expectation of, technology,” explained Jim Schuman, group general manager, ANZ Bank. “Like their results indicate, we also see that innovation -- when it enhances people's actions effectively -- can be a key factor in serving older clients as well."

For the Wealth Management study, Cisco IBSG interviewed more than 1,200 wealthy investors in the United States, United Kingdom and Germany with at least $500,000 in investable assets.

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